The presentation deals with Special contract in general and CONTRACT OF INDEMNITY , CONTRCAT OF GUARANTEE, (SEC. 126 TO 147 ) CONTRACT OF BAILMENT and CONTRACT OF PLEDGE in particular

1. SPECIAL CONTRACTS
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Dr.Ashis Dash

2. SPECIAL CONTRACTS
 CONTRACT OF INDEMNITY
(SEC. 124 & 125 )
 CONTRCAT OF GUARANTEE
(SEC. 126 TO 147 )
 CONTRACT OF BAILMENT
(SEC. 148 TO 181 )
 CONTRACT OF PLEDGE
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3. CONTRACT OF INDEMNITY
 Meaning and Definition of Indemnity
Section 124 defines a contract of indemnity as “A contract of indemnity is a
contract whereby one party promises to save the other from loss caused to him by
the conduct of the promisor himself or by the conduct of any other person.
Definition of Indemnity under Section 124 is restrictive.
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4. Features of Indemnity
-It must possess all ingredients of a valid agreement.
-It is a contingent agreement to make good the loss.
-The loss must be caused by human conduct only.
-Loss must have actually been suffered.
Parties To Contract of Indemnity
• Indemnifier
• Indemnity Holder
Examples: Marine insurance, Motor insurance, Fire insurance
Rights Of Indemnity-holder When Sued
All Damages-All Costs-All Sums
Rights Of Indemnifier
The contract act is silent about the rights of indemnifier
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5. Contract of Guarantee
Meaning and Definition
A contract of guarantee is defined by the Indian
Contract Act, as “A contract to perform the promise or
discharge the liability of a third person in case of his
default.” A guarantee may be either oral or written.
[section 126].
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6. Essentials Of Contract Of Guarantee:
-Existence of a principal debt.
-Consideration for a contract of guarantee.
--Contract of guarantee must contain all the essential elements of valid contract.
There should be no misrepresentation or concealment.
-Contract of guarantee is a complete and separate contract by itself.
Parties To Contract Of Guarantee
Surety-principal Debtor-creditor
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7. TYPES OF GUARANTEE
Special Guarantee
A guarantee is a “specific guarantee”, if it is intended to be applicable to a
particular debt and thus comes to an end on its repayment.
Continuing Guarantee
A guarantee which extends to a series of transactions is called a “continuing
guarantee”, e.g., (i) fidelity guarantee, (ii) overdraft.
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8. Rights Of Surety
Against The Principal Debtor
Right Of Subrogation
Right To Indemnity
Against The Creditor
Right Of Securities
Right To Claim Set Off
Against The Co-sureties
When Several Co-sureties Have Given Guarantee For The Same Debt With Their Maximum Limits,
They Are Liable To Pay Equally But Subject To The Limits They Have Fixed
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9. Discharge of Surety
Revocation by notice.
Revocation by death.
Discharge of surety by variance in terms of contract.
Discharge of surety by release or discharge of principal debtor.
Discharge of surety when creditor compounds with, gives time to, or agrees not to
sue, principal debtor.
Creditor's forbearance to sue does not discharge surety.
Release of one co-surety does not discharge other.
Discharge of surety by creditor's act or omission impairing surety's eventual remedy.
By the creditor losing his security.
By concealment or misrepresentation.
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10. Contract Of Bailment
What is Bailment?
Section 148 defines Bailment as:
“The delivery of goods by one to another person for some purpose, upon a
contract that they shall, when the purpose is accomplished, be returned or
otherwise disposed of according to the directions of the person delivering
them.” The person delivering the goods is called the ‘Bailor’, and the person
to whom goods are delivered is called the ‘Bailee
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11. Essentials And Legal Rules As To Bailment
Contract
Delivery of Goods
No Transfer of Ownership
Delivery of Goods for Some Purpose
Return of Specific Goods
Movable Goods
Deposit of Money Into Bank
Kinds of Bailment
On the basis of benefit
Bailment exclusive for Bailor’s benefit.
Bailment exclusive for Bailee’s benefit
Bailment for mutual benefit.
On the basis of willingness
Voluntary Bailment
Involuntary bailment
On the basis of Rewards
Gratituous Bailment
Non-Gratituous Bailment
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12. Rights of Bailor
Duties of Bailor
 Right of indemnity for losses due to negligence by bailee[S.152]
 Termination of bailment on inconsistent use by the bailee[S.153]
 Compensation for unauthorised use by the bailee[S.154]
 Compensation when the bailee mixes the goods bailed with own goods [S.155]
 Right of return of goods back[S.160]
 Right to profit from goods bailed[S.163]
To Disclose faults in goods bailed [S.150]
To repay the necessary expenses [S.158]
To indemnify the bailee [S.164]
Liability on premature breach of bailment[S.159]
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13. Rights of Bailee
Right to compensation for loss on account of fault in goods bailed[S.150]
Right to receive necessary expenses[S.158]
Right against premature termination of bailment[S.159]
Right to compensation in case of defective title[S.164]
Delivery of goods to one of the joint owners[S.165]
Right against third parties
Duties of Bailee
Take reasonable care of goods[S.151]
Not to make unauthorized use of goods[S.154]
Not to mix goods with his own goods[S.155-157]
Duty to return goods[S.160&161]
Not doing any act inconistent with terms of bailment[S.153]
Returning any profit [S.163]
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14. Contract Of Pledge Of Pawn
Section 172
“Pledge is the bailment of goods as security for payment of debt or performance of a
promise.” Bailment of goods as a security for payment of debts or performance of
promise is called pledge. The bailor is called pledgor or pawnor and the bailee is called
Pawnee.
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15. Essentials Of Pledge
Delivery of Goods:
Delivery of goods should be by way of security..
Goods must be movable.
Rights And Duties Of Pawnee
Right of retainer {S.173}:
Right of particular lien
Right to extraordinary expenses {S.175}
Right in case of default of the pawnor
Rights And Duties Of Pawnor
Right of redemption
Right to take back the goods.
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